Reasonable Cause Needed For Penalty Abatements
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What is a reasonable cause for penalty abatement?
DebtHelp.com Tip: You will not automatically be given a penalty abatement. You must show the IRS reasonable cause as to why your penalty should be either reduced or totally eliminated.
According to the IRS, there are seven categories in which your ‘reasonable cause' can fall into. Another term for ‘reasonable cause' is a good reason.
- Civil disturbance
- Serious illness of either you or a family member
- Death of a family member or yourself
- Unavoidable absence
- Lack of funds – only after you have shown you were using ordinary care and prudence in your business operations
- Reasons beyond your control that caused the inability to determine your tax
- Other reasons for not complying within the time limit. You still must show the IRS that you exercised ordinary business care, however.
You also may request a penalty abatement
when you rely on incorrect advice given by the IRS over the phone. As a result of relying on the IRS phone advice, you suffered more taxes and penalties, for instance. Your reliance upon the advice, however, must be reasonable. You must show the IRS this.